Micro-loans from a New Jersey nonprofit help businesses stay afloat while waiting for government aid.

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By the time March arrived, Joanne Pepe didn’t know where to turn.

It had been five months since Superstorm Sandy sent a deluge of sewage and salt water through Fuzzybutz, the dog care and grooming parlor she opened on Madison Street in Hoboken less than a year before.

Cleaners and contractors cleared the sludge and debris from the floor and started to rebuild and replace. But more work – and big bills – remained.

With due dates for thousands of dollars in payments approaching, major insurance claims and requests for disaster relief aid filed by Pepe were still tied up in disputes and red tape. She had already dipped into her pension earned from 10 years as a teacher and borrowed money from family members.

A last-ditch online search had led her to The Intersect Fund, a young nonprofit that gives microloans to small businesses. Several forms, conversations and site visits later, her application for a $20,000 loan was approved. An electric deposit arrived in her account in a matter of days, just in time for her to pay her bills.

“I had to write the check to the contractor literally the next day for him to do the concrete. It couldn’t have been any better timing than it was,” she said. “I really have no idea what we would have done.”

Fuzzybutz reopened in July, nine months after the storm and four months after receiving the loan from Intersect.

As billions in federal and state aid sometimes sluggishly made its way to residents affected by the hurricane that devastated much of the northeastern seaboard a year ago, nonprofits big and small stepped up to provide funding, support and boots on the ground for Sandy victims.

The Intersect Fund was one such nonprofit. Started by two Rutgers graduates in 2008, Intersect provides businesses with 'bridge' loans -- small loans designed to help a business stay afloat while starting up or awaiting another source of money. After Sandy, Intersect focused on giving loans at a discounted rate to businesses impacted by the storm.

“You have no power, you get no gas, you can’t do anything,” said Rohan Mathew, president and co-founder of the fund, describing the extent of the devastation to businesses. “I just felt like it was part of our mission to try to do something to (help them) find their way out of this.”

The fund has loaned more than $500,000 to 69 businesses in New Jersey hit by Sandy, allowing owners to replace spoiled inventory, pay staff while the doors remained closed and, in cases like Joanne’s, cover repair bills while insurance claims are sorted out.

The aid extended by the Intersect Fund – typically loans of less than $15,000 with a small accompanying grant -- is smaller in size and scope than the major federal dollars doled out by federal programs like the one run by the Small Business Administration, which approved 1,857 loans worth a combined $195 million in New Jersey alone by the time its effort wrapped up in July.

But Mathew argues that his group’s experience working with small businesses and its pared-down application allowed it to respond faster and more nimbly than the federal programs, helping deserving businesses “that weren’t going to be able to make it through that criteria and that process.”

“We really understand the reality of how small businesses operate," he said. "We don’t necessarily need the business to document every single penny that they’ve earned and spent. If they can document their sales, we know the business structure of a beauty salon or a bodega… We’ve done so many bodegas, we have a very good idea of how much they’re making and how much they can pay back.”

Working with private funds, including a $150,000 infusion from Capital One Bank, also gives them more flexibility to use “common sense” and approve loans on a case-by-case basis, even if some financial records are found to be out of date or destroyed in the storm.

“We can accept the spiral notebook that they keep under the counter when they log their sales everyday,” he said. “The SBA, that’s not something they can consider because they’ve got a binder of a standard operating procedures filled with what they need.”

Pepe, who has a degree in business and worked as a consultant for years, had more than a notebook to offer government regulators, insurers and potential lenders. Before the storm hit, Pepe and her partner, Vicki Yannacci, who grooms the dogs, went to the basement shop to prop furniture and supplies up on cinderblocks and grooming tables. At the last minute, Pepe says she also decided to back up all their business files on a flash drive that they brought back home. The cinderblocks proved futile when 44 inches of water rushed through their 1,000-square-foot space “like a tidal wave,” but the records were safe.

Access to those files didn’t help Fuzzybutz get the cash needed to repair the damages to the business.

While StateFarm promptly honored a personal property claim for damaged furniture and supplies, Pepe says appeals for more substantial aid were complicated by a Federal Emergency Management Agency appraisal that deemed the commercial-zoned condominium basement that houses Fuzzybutz a non-livable enclosure. A provision in the condo association bylaws also led SBA to deny a grant request.

In all, Pepe says she’s received about $8,400 for plumbing and electrical repairs to cover what’s amounted to $42,000 in contractor fees. She’s spent an additional $30,000 of her own money on renovations and upgrades after the storm.

“It’s very, very frustrating,” Pepe said as she sat in the courtyard where Fuzzybutz clients play outside. “I’m not looking to buy an island. I’m really just looking for what I deserve to be reimbursed for. That’s all I’ve asked the insurance company for.”

The loan from Intersect allowed Pepe and Yannacci to pay for fixes like ripping out water-damaged walls, leaving the original brick walls exposed, and raising electrical outlets up higher on the walls to protect against future floods while they continue to seek full reimbursement for their costs. Friends, clients and vendors have also chipped in, she said, helping purchase new couches for the dogs to lounge on and a flatscreen TV for Yannacci to keep on during the day.

Quantifying the total impact of nonprofits on Sandy recovery is difficult because of the number of diverse efforts involved in helping both businesses and families. Players range from major operations like The Robin Hood Foundation, which says it has distributed $73 million in grants to 400 groups, to the Monmouth/Ocean Small Business Development Center, a group partially funded by the SBA that says it provided 700-plus hours of free, confidential consultations to more than 225 businesses impacted by the storm in the two hard-hit New Jersey counties.

“People were in shock to the point that we were like, ‘How can I help you?’ and they we’re like, 'We don’t know.’ They were extremely overwhelmed,” Jackeline Meijas-Fuertes, regional director for the center, said. “We gave them a really good opportunity to get things off their chest and do an assessment with them and create a strategy for them where they can start to move forward with their businesses.”

While federal and state funds continue to play a role in the recovery, Mathew and others say the need for additional charitable contributions will only grow as government aid runs dry and claims are settled short of what is needed. Funding from private sources has allowed The Intersect Fund to extend its Sandy relief initiative through June of 2014 to help businesses and communities still trying to rebound.

“At the end of the day, small businesses are one of the things that really make a community what it is,” Mathew said. “It’s been really cool to see some examples of rallying support to keep the business and get them through it as the whole community recovers.”